• December 20, 2022
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Does It Really Matter Whether I Trade With Trend Or Against Trend?

Does It Really Matter Whether I Trade With Trend Or Against Trend?

We’ve all been trading for a while now, and at some point, we probably all have asked this question: ‘Does It Really Matter Whether I Trade With Trend Or Against Trend?’ Well, in this article I’m going to answer your question with a resounding ‘yes!’ But first, I’m going to explain what that really means.

 

Trending markets: what does it mean?

Trending markets are the ones that move in a particular direction for a period of time, like stocks or commodities. They can be either up or down, and they’re usually pretty easy to spot.

When you trade with the trend, you’re essentially trying to guess which way the market will continue to move. If you think it will go up, then you buy as soon as it starts moving upward; if you think it will go down, then you sell when it starts moving downward.

Trading against the trend is a bit more complicated than trading with the trend. You’re basically betting against what other traders are doing—you think that their moves are going to be wrong and that your decision will be right.

 

How can we know whether a market is trending or not?

How can we know whether a market is trending or not?

You need to look at the market’s price and volume. Trading with the trend will help you make more money, while trading against the trend will lose you money.

To trade with the trend, you need to find a market that has been rising or falling for some time and then wait until it begins to reverse. When this happens, you want to buy when the price is at its lowest point and sell when it is at its highest point. This way, you will be buying low and selling high.

Trading against the trend involves finding a market that has been declining for some time and waiting for it to turn around. You then sell when it reaches its peak and buy when it reaches its trough; this way, you are selling high and buying low.

 

Trend or Range-Bound?

The short answer is, it doesn’t matter.

The longer answer is that there are some pros and cons to trading with a trend or against one.

When you trade with a trend, you’re making money as prices go up. You’ll want to look for the highest probability trades, which means you’ll want to find a stock that’s already moving in your direction and ride it until it stops going up.

When you trade against a trend, you’re making money as prices go down. You’ll want to find stocks that are dropping and wait for them to bottom out before buying them.

The best way to tell if a stock is trending up or down is by looking at its price chart (also known as a candlestick). The price chart shows what happened over time: the stock’s highs and lows over the course of days, weeks, months—even years!

If you see that prices have been moving up steadily for several months without any major dips or peaks—known as “up trending”—then it’s likely that they’ll continue going up in the near future. If they’ve been moving sideways for several months without any major changes in direction—known as “rangebound” or “sideways”—then it’s likely that they will

 

Trading With The Trend

When you trade with the trend, you’re essentially betting that the price will go up. If it does, then you’ll make money on your investment. You’re also trying to predict when the price will reverse course and go back down again.

If you’re trading against the trend, then you’re betting that the price will go down. If it does, then you’ll make money on your investment. You’re also trying to predict when the price will reverse course and go back up again.

 

Ways to trade with the trend

Trading with the trend is a great way to make money.

You can trade with the trend by buying when the price of an asset is going up and selling when it’s going down. This technique, called “buying low / selling high,” is common sense, but it’s also one that many traders fail to follow.

Trading against the trend can also be profitable if you know what to look for. When you’re trading against the trend, you’re looking for opportunities where an asset is experiencing a downward movement but has already reached its lowest point—that’s called “buying high / selling low.”

Trading against the trend can be risky because it’s possible that the asset will even go lower than its current price before it starts rising again.

 

Why you might want to go against the trend

It matters because if you’re a trader, you want to make money. And the easiest way to do that is by trading with the trend. But there are also some advantages to trading against the trend.

If you want to trade with the trend, then it’s important to know what a trend is and how it works. A trend refers to the general direction of price over time, which can be either up or down. When prices are rising, that’s referred to as an uptrend . When prices are falling, that’s referred to as a downtrend .

If you’re in an uptrend , then you’ll want to buy when prices go up and sell when they go down. The opposite is true if you’re in a downtrend : you’ll want to sell when prices go up and buy when they go down.

The reason why trading with the trend is so powerful is because it allows you buy low and sell high—or vice versa—which means that your profits will be higher than if you’d bought at one price point but sold at another.

However, there are times when this isn’t true and trading against the trend can be more profitable (even though it might seem counterintuitive). This happens when something happens that causes people’s perception of

 

Playing with the odds

Playing with the odds is always a good idea. If you’re going to play the odds, it’s best to play them in your favor. So if you want to trade with trend, that’s great! But if you’re not sure which way the market is moving, or you’re just not sure what direction to go in…

The best thing to do is to wait for a clear signal. This could be a reversal pattern or just a break of support/resistance levels. When you see this signal, then you can start trading with the trend. If the signal turns out to be wrong (and it often will), then don’t worry about it because you’re still playing with the odds in your favor.

 

Trends do matter and it’s important to evaluate how and when to trade with or against them.

In the end, as with most things in life, it really does come down to whatever works best for you. Both trend trading and countertrend trading can lead to lucrative returns, but it is important to evaluate your appetite for risk and define your trading strategy accordingly.

 

IC Markets & Tickmill

Pepperstone & Capital.com

Top FX & HFM

AMarkets & FXTM